ROC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
par value $0.001 per share |
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The (The Nasdaq Global Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of July 29, 2024 the registrant had
Table of Contents
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Page |
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PART I. |
1 |
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Item 1. |
1 |
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1 |
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2 |
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Condensed Consolidated Statements of Changes in Permanent Equity (Deficit) |
3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
Item 3. |
38 |
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Item 4. |
39 |
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PART II. |
40 |
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Item 1. |
40 |
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Item 1A. |
40 |
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Item 2. |
Unregistered Sales of Equity Securities Use of Proceeds and Issuer Purchases of Equity Securities |
40 |
Item 3. |
40 |
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Item 4. |
40 |
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Item 5. |
40 |
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Item 6. |
41 |
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42 |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
GEN RESTAURANT GROUP, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share information) |
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June 30, |
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December 31, 2023 |
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(unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Equity method investment |
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Property and equipment, net |
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Goodwill |
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Operating lease assets |
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Deferred tax asset |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and equity |
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Current liabilities |
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Accounts payable |
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Accrued salaries and benefits |
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Accrued interest |
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Notes payable, current |
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Notes payable to related parties |
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Obligations under finance leases, current |
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Operating lease liabilities, current |
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Deferred Restaurant Revitalization Fund grant |
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Advances from members |
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Other current liabilities |
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Total current liabilities |
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Notes payable, net of current portion |
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Tax receivable agreement liability |
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Operating lease liabilities, net of current portion |
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Total liabilities |
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Mezzanine equity |
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EB-5 Members’ equity |
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Permanent equity |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Retained Earnings |
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Non-controlling interest |
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Total permanent equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
GEN RESTAURANT GROUP, INC
Condensed Consolidated Income Statements
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Three months ended June 30, |
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Six months ended June 30, |
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(in thousands, except per share amounts) |
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2024 |
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2023 |
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2024 |
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2023 |
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(unaudited) |
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(unaudited) |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Restaurant operating expenses: |
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Food cost |
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Payroll and benefits |
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Occupancy expenses |
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Operating expenses |
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Depreciation and amortization |
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Pre-opening costs |
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Total restaurant operating expenses |
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General and administrative |
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Consulting fees - related party |
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— |
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— |
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Management fees |
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— |
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— |
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Depreciation and amortization - corporate |
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Total costs and expenses |
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Income from operations |
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Employee retention credits |
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Other income (loss) |
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— |
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( |
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— |
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Gain on remeasurement of previously held interest (see Note 3) |
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— |
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— |
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— |
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Interest income (expense), net |
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( |
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Equity in income (loss) of equity method investee |
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— |
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Net income before income taxes |
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Provision for income taxes |
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Net income |
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Less: Net income attributable to noncontrolling interest |
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Net income attributable to GEN Restaurant Group, Inc. |
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Net income attributable to Class A common stock per share - basic and diluted (1) |
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$ |
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— |
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$ |
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— |
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Weighted-average shares of Class A common stock outstanding - basic (1) |
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Weighted-average shares of Class A common stock outstanding - diluted (2) |
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Net income per share of Class A common stock - basic (1) |
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$ |
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— |
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$ |
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— |
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Net income per share of Class A common stock - diluted (2) |
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$ |
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— |
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$ |
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— |
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(1) (2) Basic and diluted net income per share of Class A common stock is presented only for the period after the Company’s organization transactions.
See Note 1 for a description of the organizational transactions. See Note 15 for calculation of net income per share.
See accompanying notes to condensed consolidated financial statements.
2
GEN RESTAURANT GROUP, INC.
Condensed Consolidated Statements of Changes in Permanent Equity (Deficit)
(unaudited)
Six months ended June 30, 2024 and June 30, 2023
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Redeemable |
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Members' equity |
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Class A |
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Class B |
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Additional |
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Accumulated |
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Non- |
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Stockholders' |
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(in thousands) |
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Units |
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(deficit) |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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Deficit |
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Interest |
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(deficit) |
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Balance, December 31, 2022 |
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$ |
- |
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$ |
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$ |
- |
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$ |
- |
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$ |
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$ |
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$ |
( |
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Redemption of Class A and B common units |
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Net income |
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Member distributions |
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Balance, March 31, 2023 |
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$ |
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- |
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$ |
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- |
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$ |
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$ |
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$ |
- |
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$ |
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$ |
( |
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Activity prior to the initial public offering and related organizational transactions: |
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Net income prior to the organizational transactions |
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Conversion of related party loans to equity |
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Member distributions |
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Effects of initial public offering and related organization transactions: |
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Effects of the organizational transactions |
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Issuance of Class A common stock in the IPO, net of underwriting discount |
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Issuance of Class A common stock to underwriters upon exercise of overallotment option |
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Issuance of Class B common stock in the IPO, net of underwriting discount |
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Conversion of Class B common units into Class B Shares |
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Capitalization of initial public offering costs |
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Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increase in tax basis |
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Activity subsequent to the initial public offering and related organizational transactions: |
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Net income |
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NCI Adjustment |
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- |
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Balance, June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Redeemable |
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Class A |
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Class B |
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Additional |
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Retained |
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Non- |
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Stockholders' |
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(in thousands) |
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Units |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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Earnings |
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Interest |
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Balance, December 31, 2023 |
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- |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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Stock-based compensation |
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Issuance of Class A common stock |
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Adjustment to tax liabilities and assets under TRA |
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Shares issued upon RSU vesting |
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Exchange of noncontrolling interest for Class A common stock |
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( |
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( |
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- |
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Balance, March 31, 2024 |
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$ |
- |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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$ |
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$ |
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|||||||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|||||||||
Issuance of Class A common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|||||||||
Contribution by shareholder in final IPO settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|||||||||
Balance, June 30, 2024 |
|
$ |
- |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
See accompanying notes to condensed consolidated financial statements.
3
GEN RESTAURANT GROUP, INC.
Condensed Consolidated Statements of Cash Flows
|
|
For the six months ended June 30, |
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
|
|
(unaudited) |
|
|||||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net Income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to cash provided by operating activities |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Equity in income of equity method investee, net of distributions |
|
|
|
|
|
|
||
Gain on remeasurement of previously held interest |
|
|
( |
) |
|
|
— |
|
Acquisition related costs |
|
|
( |
) |
|
|
— |
|
Stock-based compensation |
|
|
|
|
|
— |
|
|
Amortization of operating lease assets |
|
|
|
|
|
|
||
Interest income earned on Notes receivable from related party |
|
|
( |
) |
|
|
( |
) |
Deferred tax benefit |
|
|
( |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued salaries and benefits |
|
|
( |
) |
|
|
|
|
Accrued interest |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Income tax payable |
|
|
— |
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
|
||
Proceeds from recovery of Notes receivable from related party |
|
|
— |
|
|
|
|
|
Advances made to related party |
|
|
— |
|
|
|
( |
) |
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Acquisition of GKBH, net of cash acquired |
|
|
( |
) |
|
|
— |
|
Net cash (used in) provided by investing activities |
|
|
( |
) |
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
||
Proceeds from issuance of Class A common stock sold in IPO, net of underwriting discount |
|
|
— |
|
|
|
|
|
Payments to members for advances |
|
|
( |
) |
|
|
( |
) |
Advance from members |
|
|
— |
|
|
|
|
|
Payments for deferred offering costs |
|
|
( |
) |
|
|
( |
) |
Payments on PPP and EIDL loans |
|
|
( |
) |
|
|
( |
) |
Payments on finance leases |
|
|
( |
) |
|
|
( |
) |
Payments on third party loans |
|
|
( |
) |
|
|
( |
) |
Payments on related party loans |
|
|
— |
|
|
|
( |
) |
Payment on line of credit |
|
|
— |
|
|
|
( |
) |
Proceeds from line of credit |
|
|
— |
|
|
|
|
|
Proceeds from third party loans |
|
|
— |
|
|
|
|
|
Proceeds from related party loans |
|
|
— |
|
|
|
|
|
Member distributions |
|
|
— |
|
|
|
( |
) |
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Net increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of the period |
|
$ |
|
|
$ |
|
||
Supplemental disclosures of other cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for taxes |
|
|
— |
|
|
|
— |
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
||
Unpaid purchases of property and equipment |
|
|
|
|
|
|
||
Unpaid deferred offering costs |
|
|
|
|
|
|
||
Leased assets obtained in exchange for new operating lease liabilities |
|
|
|
|
|
|
||
Distribution payable |
|
|
— |
|
|
|
|
|
Conversion of related party loans to equity |
|
|
|
|
|
|
||
Issuance of promissory note for business acquisition |
|
|
|
|
|
— |
|
|
Contribution by shareholder in final IPO settlement |
|
|
|
|
|
— |
|
|
See accompanying notes to condensed consolidated financial statements.
4
GEN RESTAURANT GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 2024 and 2023
The accompanying consolidated financial statements represent the consolidated balance sheets, income statements, changes in permanent equity (deficit), and cash flows of GEN Restaurant Group, Inc and its consolidated subsidiaries (the “Company”). The Company operates restaurants which are located in California, Arizona, Hawaii, Nevada, New York, Washington, Florida, and Texas, specializing in a variety of special flavored meats for Korean barbeque.
The following tables lists the Company’s entities in operation as of June 30, 2024:
Name |
|
Operating Name |
|
State |
|
Purpose |
GEN Restaurant Group, LLC |
|
GEN Tustin |
|
CA |
|
|
|
|
GEN Huntington Beach |
|
CA |
|
|
|
|
GEN Oxnard |
|
CA |
|
|
JC Group International Inc. (S Corp) |
|
GEN Henderson |
|
NV |
|
|
|
|
GEN West Covina |
|
CA |
|
|
|
|
GEN Corona |
|
CA |
|
|
GEN Restaurant Investment, LLC |
|
GEN Glendale |
|
CA |
|
|
GEN California, LLC |
|
GEN Fullerton |
|
CA |
|
|
|
|
GEN Mira Mesa |
|
CA |
|
|
GEN Arizona, LLC |
|
GEN Tempe |
|
AZ |
|
|
GEN Chandler, LLC |
|
GEN Chandler |
|
AZ |
|